BACKGROUND: Individuals with autism are often reported to have difficulty with emotion processing. However, clinical and experimental data show that they are sensitive to familiarity; for example, they show normative attachment to familiar people, and have normative brain activity in response to familiar faces. To date, no study has measured their reactivity to the emotions of familiar vs. unfamiliar people. Thus, our aim was to determine whether individuals with autism would show normative reactivity to emotion in familiar people. METHODS: Participants were 21 children with autism and 21 children with typical development, aged two to five years, matched on age and gender. The children observed videos of familiar people (their child-care teachers) and unfamiliar people expressing fear, whilst their visual attention and pupillary reactions were recorded (the latter as an index of emotional reactivity), using eye tracking technology. RESULTS: The children with autism showed normative pupillary reactions (peak magnitude) to fear expressed by familiar people, but a reduced response to fear expressed by unfamiliar people. However, across familiarity conditions, the children with autism had longer latency peak responses than the typically developing children. This pattern of findings was independent of cognitive factors or visual attention as visual attention by group was not related to familiarity condition. The children with autism had reduced visual attention to neutral faces; however, on fearful faces there were no group differences. Abnormalities in pupillary reactivity in the autism group were related to less prosocial behaviour and more severe play and communication deficits. CONCLUSIONS: Children with autism were less atypical in their responses to fearful expressions of people they know, arguing against a pervasive emotional impairment in autism, but rather one that may be mediated by familiarity.